Borrowing from friends: Till debt do us part

Dubai: On September 20, an Asian man who burned his friend’s car in July for not returning his money was sentenced to be deported after serving a three-month jail sentence and paying a fine of Dh11,000.

What started out as an act of kindness to his friend turned into a vengeful act.

The accused set his friend’s car ablaze after the latter delayed paying his debt and ignored his calls. The accused needed the money back for his sick wife.

Lumi, a Pakistani expatriate, is also one of those who have been driven to the brink many a time after lending money to friends in need.

Over the years, he has lent nearly Dh100,000 — some of it he had to borrow from other friends — to help friends save their businesses, renew their trade licences, get a phone line, or pay their rent or car instalment. Not everyone repays though.

“The big problem is I lend with a clean heart so I don’t ask for cheques or guarantees. I treat them as brothers. Help them and God will help you,” Lumi, 30, told Gulf News. “But I end up suffering and paying for their debt.”

Lumi said he last lost two friends along the way.

“I don’t care getting the money coming back from them anymore. He was angry with me because I was asking him to pay me back because I could see how luxurious his lifestyle was. But I was not the priority.”

Lumi finally stopped lending five months ago. He only gives a small portion of the amount genuinely needed as charity.

Lumi, a Pakistani who helped and lent money to friends who have failed to pay back. Atiq Ur Rehman/Gulf News

The practice of borrowing and lending transcends cultures and time, said Dr Rimma Sabban, a sociologist and associate professor at Zayed University. Whether it be a missing ingredient, a tool or a lawnmower, knocking on a friend or neighbour’s door in an integrated community is common practice.

Borrowing money, however, is a different issue on its own as it can either make or break a friendship, sometimes, even family ties.

“It’s a practice you can find among people who are close to each other or are working together. But then also, there are people who borrow but don’t return the money and they become tainted,” Dr Sabban told Gulf News.

“Borrowing money is not good or bad. There is no value added. We add the value.”

When do we draw the line?

Helping a friend in genuine need is a good thing. But if the friend has become a chronic borrower, lending to him or her is equivalent to enabling bad behaviour, Nathan McFarlane, a Dubai-based financial planner, said.

“Everyone wants to help people. You can’t take that part of human nature out of us. If someone is in serious trouble, if it’s a one-off thing like they lost their job or something, they’ll lend once,” McFarlane, also the founder and CEO of financial advisory firm Filpera, told Gulf News.

“But if it’s a chronic borrower, the best lesson he or she could be given is to say ‘no’ so he or she will have to struggle but, in the struggle, realise a way to make it work and learn to stand on his or her own feet.”

McFarlane said the loan amount is not the issue. Whether it’s Dh50 or Dh1,000, it needs to be returned with priority. This means if you owe a friend and a bank, your obligation is to pay your friend first because there is emotional attachment to the transaction. This is not so with the bank.

For some people, saying ‘no’ comes easy. For those who just can’t, it’s a matter of developing that resolve, McFarlane said.

“Chronic borrowers have to lose this attitude that ‘Someone else will help me’. But it all goes back to people who lend to learn to say no because the cycle continues if they continue to lend over and over to the same person. At the end of the day, your own financial well-being is more important than someone else’s.”

How to end lend-borrow cycle

Advice from Dr Rimma Sabban and Nathan McFarlane

Borrower:

1 Decide to not resort to borrowing money ever again.

2 Write down your budget before the month begins and stick to it. Make payments to friends you’ve borrowed from a priority.

3 If you’re bleeding financially, the first thing to do is to stop the bleeding. Live below your means. Cut deep on your lifestyle – no eating out, no shopping temporarily. Sell stuff and find side hustles.

4 Discipline yourself to save for foreseen big and small expenses.

5 Set aside in cash three (or six) months’ worth of expenses as Emergency Fund so you won’t have to borrow from anyone again.

Lender:

1 Learn to say no. It’s not a crime to say no especially to people who always borrow from you.

2 Teach the borrower to fix his budget and set up an Emergency Fund.

3 If you can’t say no and really want to help, then don’t lend. If you can afford it, make room for it in your monthly budget and itemise it like a Charity Fund or Help Fund. You can give (not lend) what’s in that fund that month, nothing more.

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